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Why It’s So Difficult to Manage Your Own Portfolio

Door Into Mind

These days, the rage is all about passive investing. That’s because over the last few decades, it’s become crystal clear that active management (aka. stock picking) doesn’t work. Even the most astute stock pickers, with millions of dollars’ worth of research at their fingertips, consistently underperform basic index funds.


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Posted in: Automation Behavioral Finance Index Funds Investment Insights Psychology

Basic Probability Theory

Basic Probability Theory

The unfortunate reality is that nothing in this world is certain. In fact, the only thing in life that is certain ... is that nothing is certain. This is especially true when we talk about money and investing. Since we can't deal with certainties, we're forced to deal with probabilities. Therefore, probabilities become the lens through which we must view all things investment related.


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Posted in: Behavioral Finance Investing Basics Investment Insights Psychology Risk

The Cycle of Investor Emotions

The Cycle of Investor Emotions

Evidence from numerous studies on behavioral finance suggests that the need for emotional comfort costs the average investor around 2-3% per year in foregone investment return. This shortfall, commonly referred to as the "behavior gap," stems from the fact that optimal long-term financial decisions are often very uncomfortable to live with in the short-term.


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Posted in: Behavioral Finance Investment Insights Psychology Stocks

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